 In this presentation, we will take a look at the objectives of our practice problem. Let's get into it within to its QuickBooks Online. Here we are in our not-for-profit company or not-for-profit organization dashboard. Note that we may have more appropriately named it not-for-profit organization because that's the typical kind of generic name that you'll see more often. But this is just going to be the generic name of the company obviously in practice. It would actually be the company or organization name here. In the first section of the course, we're going to do some navigation through the course and I'm actually going to be looking at the practice problem file which will be a completed work. So this will be the completed work that I'm looking at when we look at reports. In other words, we'll look at the reports for the completed work. If you're following along and starting a new company file, then of course you will have no data yet in your company file. We will be creating this as we go. But our goal here is to get an end point, see where we're headed towards and then we'll start the new company file from scratch and simply enter the data as we go and then generate this information. The course will start off with some basic kind of navigations through the QuickBooks Online software. We're going to take a look at some of the cycles to navigate through the QuickBooks Online software. Note that when you think about QuickBooks Online, you're typically thinking about a for-profit type of organization or even if you're thinking about accounting in general. We typically think of a for-profit organization first because that's going to be the general rule and then adopt it basically to a not-for-profit organization. So in other words, you really want to think about accounting, what's going to be the accounting general rules and then kind of one of the things that we need to adjust for the not-for-profit organization because of the nature of the not-for-profit organization. There's going to be some unique challenges with relation to the not-for-profit and some challenges with regards to the reporting of a not-for-profit which will differ from a for-profit type of organization. In order to see those challenges and be able to lay them out and then figure out how we're going to deal with them within QuickBooks Online and understand how that process works, we will actually look at an Excel worksheet. So we'll be working through an Excel worksheet problem in a step-by-step process very quickly, very simply in a step-by-step process. I know this worksheet's a little bit overwhelming that I jump into this worksheet here. Our objective is to use Excel as more of a transparent tool that we can actually see how everything is going to be connected, more like doing this by hand. And then go to QuickBooks, which is going to be a database program, which you can't really see what happens in the in-between. We fill out a data input form, populate so then the financial statements and you got to basically kind of understand what is happening in the between steps. So what we'll do then is take a look at journal entry by journal entry. We'll take a look at a transaction, consider what it would be in terms of the accounts that would be affected, the journal entry that would be affected, and then we'll actually post that journal entry to a trial balance in terms of an Excel worksheet. Then we'll go and jump back over to QuickBooks and we'll think about the data input form, which will typically be some kind of form such as this, like a check form or an expense form or an invoice form or a sales receipt, typical forms that we will be using and think about how those forms then basically do the same thing, enter a journal entry into the system and then we will consider the financial statements. Now some of the challenges also we'll be dealing with the fact that we have in terms of the financial statements, we can consider if I go down to the statement of activities, this is kind of like the income statement. Then one challenge we have is of course the names a little bit different. That's not too difficult for us to deal with within QuickBooks Online. Income statement, we could change to a statement of activities, but we also have this kind of breakout that we have to deal with with a not-for-profit organization between the items that are going to be with donor restrictions and without donor restrictions. So are there restricted items that is involved with our not-for-profit organization? If there are, then we have to list those out. Now note here in the statement of activities the typical way we do that is with two columns. And if you think about like a normal trial balance where you're just recording things to two accounts, you don't typically have that two column setup, you just got a list of accounts. So how then are we going to going to take a typical kind of trial balance situation and be able to create a report that's kind of like an income statement, but it's going to be breaking out between with donor restrictions and without donor restrictions. That's one of the challenges for a not-for-profit organization. What we will do is we'll take a look at classes to help us break that information out. That's going to be the tool that we will use. And then within these categories, we could have further breakouts, further information, for example with regards to the items without restrictions. We also then want to see those items in terms of what they're going to be used for, at least with the expenses is going to be a requirement. And that means that with regards to expenses, we want to see expenses by basically their nature. And that's what you actually normally would put them into a for-profit organization for, like the rent, the salaries, expense, telephone and so on and so forth. That's the nature of the expense. We also want to see what they're used for, their function. So we also have to group that information by such as their programs, program, in our case being education and community service, and things like the management and general and fundraising. So we want to be able to allocate the expenses in that format as well. And note what our goal here is. Oftentimes when you're looking at the board of directors, our goal is to take all this information and one put it in such a way that we fulfill the requirements for a not-for-profit organization in terms of reporting purposes, but two also give this information, which is a little bit more overwhelming in some ways than even a normal financial statement information and give it to say like a board of directors so that they can make a decision making process in on it and therefore give this information and maybe chunks, right? We can put all this into one form, which means all this into one form with the statement of activities. But if we were to do that, it might be a little bit overwhelming. So typically we're going to make the statement of activities in some type of format that's more digestible and can make decision making matters can be made on it a little bit more easily. Then we're looking to break out the more information that we would need such as another schedule like this that would break out the expenses by both nature and by function. Also note that when you're thinking about a not-for-profit organization, one of the things people are going to be considering is of the expenses we have, how much of those expenses are going to the actual thing that the not-for-profit supposed to be doing, which is going to be the programs versus the admin and the fundraising. That can help you to see how efficient the program is at doing the task that they're trying to do. So that's one of the reasons that you need to break that information out in a not-for-profit. When you're talking about a for-profit organization, it's straightforward. All the expenses have the objective, we're assuming, of profits and that's why all the expenses are there. I don't need to break out the programs in this way when really the one objective is profit, of course. And so you have a little bit different of an objective with regards to the financial statements and therefore the formatting of the financial statements will be broken out in a bit different fashion. So we have these items here. Again, we're gonna use class tracking to help to do this, help to add this basically dimension into the practice problem. You can see if we did this in Excel, as we will do, we have a practice problem at the bottom of the course where you can actually work through this entire worksheet step-by-step in Excel. We won't do that as we go through the course because we're focused on QuickBooks, but we'll jump back to this Excel worksheet so you can look at it. Obviously, if you did it in Excel, you'd have to be working on two different schedules. I gotta make one schedule and then make another schedule from it. If you do it in QuickBooks, our objective is to say, okay, I wanna enter something in so the form will automatically, the form will automatically create our trial balance, create our normal type of financial statements, income statement balance sheet, or their equivalents, and then help us to make the adjusted financial statements, including the statement of activities breaking out by column as well as our information in terms of the expenses breaking them out as well. We also have the information that's gonna be restricted down here. So we have restricted items, and these are items that have some type of restrictions, some type of donor restriction on it. And again, we might want to track those restricted items and be able to line them up item by item. And we're gonna use either the jobs feature and or classes feature to do that as well. So you can see we have these kind of added dimensions with regards to the not-for-profit organization. And our objective is to use the tools within QuickBooks Online. That includes some tools that we don't always use. You don't always see for a for-profit organization, including the class tracking feature, as well as possibly the jobs tracking type of feature as well. So that's gonna be kind of our general objective here. In future presentations, we'll go into this objective in a bit more detail and we'll concentrate on the navigation and getting around the QuickBooks Online file. And then we'll go into the actual construction of basically this information within QuickBooks. We'll go through the transactions in a step-by-step process of actually entering this information, not by journal entry as we do in Excel, but in QuickBooks using our forms. And then we'll jump back to the Excel worksheet to see what is happening in a more transparent way. We'll take a look at the accounts that will be affected, the effect on the financial statements. That's gonna be it for now. Let's get out of here.